A Vibrant Turnaround for a Neglected Charleston Neighborhood

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The offices of BoomTown, a real estate technology company, in the Pacific Box & Crate complex in Charleston, S.C. The complex is one of two recently developed properties on the Upper Peninsula that are luring tech companies and other businesses to the area.CreditCreditKate Thornton for The New York Times

By Nick Madigan

Aug. 29, 2017

CHARLESTON, S.C. — On Sunday mornings about a decade ago, shortly after he moved here, Stephen J. Zoukis used to ride his bike around a ramshackle neighborhood a couple of miles north of the city’s celebrated historic district and wonder why no one had built anything of note there.

The neighborhood, known in the 1850s as Cool Blow Village and now as the Upper Peninsula, was dotted with small houses, warehouses and metal sheds; had only a few sidewalks; and was infused with an air of neglect. Even with easy access from an interstate ramp, the neighborhood “lacked an economic pulse,” he said.

“I thought, why is there nothing here?” recalled Mr. Zoukis, a 62-year-old developer who, as a partner in Jamestown Properties beginning in 1993, made a large imprint on high-end New York real estate. His purchases included the General Motors Building, One Times Square, the Eighth Avenue building that houses Google’s New York operations, the headquarters of News Corporation and the Chelsea Market.

Surveying the unprepossessing landscape of Charleston’s Upper Peninsula, Mr. Zoukis imagined that it could be so much more.

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Stephen J. Zoukis, one of the Pacific Box & Crate developers. As a partner at Jamestown Properties in New York, he made a mark on the Manhattan commercial real estate landscape. Chelsea Market was among his purchases.CreditKate Thornton for The New York Times

“We saw a big opportunity for our kind of money,” said Mr. Zoukis, who, flush with cash from the sales of most of the New York properties, was unencumbered by the need to seek financing from banks. He joined forces with a Charleston partner, Michael L. Wooddy, who holds 10 percent of Mr. Zoukis’s position, and in 2012 began snapping up all the available lots they could find, ultimately more than 20.

“It was really before people realized what was happening, so the pricing was very different than it is now,” Mr. Zoukis said, referring to a recent boom in Charleston’s commercial and residential sectors. “You looked at a map of the city and clearly people had to move up the peninsula because there was no place else to go.”

Working under their new shingle, the Raven Cliff Company, the partners initially sought to build a “shrunken” version of the Chelsea Market, the highly successful assemblage of food vendors and retail stores in Manhattan. “But we determined that you can’t really just scale these things down that way,” Mr. Zoukis said, noting the chasm between a place like New York’s Fulton Fish Market, which “cleans a million pounds of fish a day,” and “someone who’s starting an artisanal pickle company.”

A fresh option was suggested by Charleston’s budding tech sector, which has since grown to about 250 companies in the metro area, according to the Charleston Regional Development Alliance. Many were downtown and had little room to expand there. That inspired the two Raven Cliff partners — eventually joined by two others, Martin Skelly and Christian Sullivan — to step in.

“I knew that we could get the tech companies to fill these places,” Mr. Zoukis said of his Upper Peninsula properties. He and his partners spent more than $70 million, including construction costs and the land purchases, to create two architecturally striking office park developments to accommodate not only tech companies but businesses that could provide goods and services to the companies’ workers, as well as to the public.

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CreditKate Thornton for The New York Times

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Top, dogs are welcome at some companies in Pacific Box & Crate. Above, the offices of SIB Fixed Cost Reduction, an expense management firm, at the Half Mile North complex.CreditKate Thornton for The New York Times

“We saw them as places to not just impress your clients, like a law office, but to impress your employees,” Mr. Zoukis said while sipping a cortado in a gleaming, white-tiled coffee and pastry shop at one of the two developments, Pacific Box & Crate, which covers 131,000 square feet in three buildings.

In January, Pacific Box & Crate opened to its first tenant, BoomTown, which employs 250 people and creates software for real estate brokerage firms. “This suited our needs,” said Nina Magnesson, whose business card describes her as a “catalyst” for “citizenship and social innovation.”

The space BoomTown occupies, all 56,854 square feet of it, was designed in the “industrial chic” style and built for the company from what had been “a disaster of a warehouse,” Ms. Magnesson said. “We were the first to sign on here. We’d been in a little old grocery store downtown.”

Other tenants at Pacific Box & Crate — named after previous industrial tenants on the property — include PhishLabs, which helps companies and organizations fight cyberattacks; the crowdfunding company CrowdReach; Twelve South, which makes tech accessories; and the Harbor Entrepreneur Center. There are also Bad Wolf Coffee; Reverb Yoga; Edmund’s Oast Brewing Company, set to open on Sept. 14; and a 9,970-square-foot food court, called Workshop, that functions as a “food incubator” for aspirant restaurateurs.

“Who wouldn’t love this space?” asked Suzie Rybicki, a vice president for talent management at PhishLabs, as she surveyed the company’s stark, efficiently laid out, two-story headquarters. “If you think about what’s been developed up here, with the restaurants, etc., it’s a very different scene.”

A few blocks away, Raven Cliff’s other development, Half Mile North — its name an allusion to the site’s distance from the Arthur Ravenel Jr. Bridge — has been in business since April 2013. Its 12 buildings, which add up to 90,583 square feet, house several tech companies, including Blue Acorn, which calls itself a “premium ecommerce agency”; the “automated bookkeeping” firm Ceterus; SIB Fixed Cost Reduction, an expense management firm; and Integral Solutions Group. There are also three restaurants, a cheese store, an architecture firm and a shop that sells decorative hardware.

“Steve has taken a unique approach,” said Kristopher B. King, the executive director of the Preservation Society of Charleston. “His strategy gets these neighborhoods functioning, which is a huge positive. It’s putting these properties back on the tax rolls, creating jobs and bringing vibrancy to an area that quite honestly, 10 years ago, really needed it.”

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CreditKate Thornton for The New York Times

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Top, Ashley Bell instructs students at Reverb Yoga at Pacific Box & Crate. Above, the Butcher & Bee restaurant at Half Mile North.CreditKate Thornton for The New York Times

In addition, the two developments appear to have helped raise the cost of nearby properties.

“When we initially started buying land, values were in the $500,000 to $800,000 range per acre,” Mr. Wooddy said. “Now, purportedly, there are some tracts of land under contract for as much as $4 million per acre. Undoubtedly, land values have skyrocketed on the Upper Peninsula since we started to work in this area.”

At the same time, Mr. Wooddy said, rents for office space there have doubled since 2013.

Rising prices are also a factor elsewhere in Charleston and its periphery. A wave of real estate investment, much of it from Europe, is beginning to change the landscape in all but the city’s protected core.

“We’re talking to outside entities every month — that’s a new phenomenon,” said Michael J. Graney, a vice president for global business development at the Charleston Regional Development Alliance. “It used to be that people thought we were talking about Charlotte,” he went on, referring to the larger city in North Carolina, “but the recognition factor has dramatically increased. Many of the investors we talk to have already been here as tourists.”

The boom in Charleston is already running up against a shortage of options.

“Lack of readily developable land in the Charleston region is a real challenge,” said Stephanie L. Yarbrough, a lawyer who represents companies looking to set up industrial plants, distribution centers or offices in the area. “One of our hurdles is finding them a place that is ready to go.”

Long a magnet for tourists, Charleston has taken decades to evolve from a placid, picturesque Southern town, replete with historical significance, into something resembling a 21st-century city.

“We’re in the awkward adolescent period of growth,” said Josh Martin, a senior adviser to Charleston’s mayor, John Tecklenburg. “This happened very quickly, and we’re trying to grow up.”

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Gregg Pavone puts the final touches on a sign he was painting overlooking the lawn (made of artificial turf) at Pacific Box & Crate.CreditKate Thornton for The New York Times

Correction:Aug. 29, 2017

A photo caption in an earlier version of this article misidentified a project that Stephen J. Zoukis helped develop. He is one of the developers of Pacific Box & Crate in Charleston, S.C., not BoomTown, which is a tenant at Pacific Box & Crate.

Correction:Aug. 31, 2017

An article on the Square Feet page on Wednesday about the Upper Peninsula neighborhood in Charleston, S.C., misidentified a company located in the Half Mile North development in the city. It is SIB Fixed Cost Reduction, not SIB Development and Consulting.

A version of this article appears in print on , on Page B6 of the New York edition with the headline: Tech Firms Revitalize a Neglected Neighborhood. Order Reprints | Today’s Paper | Subscribe